Tourmaline Bio, Inc. entered into a definitive agreement to acquire Talaris Therapeutics, Inc. (NasdaqGM:TALS) from shareholders in a reverse merger transaction on June 22, 2023. Subject to the terms and conditions of the merger agreement, at the closing of the Merger and related transactions, (a) each then-outstanding share of Tourmaline common stock will be converted into the right to receive a number of shares of Talaris common stock calculated in accordance with the merger agreement (the “Exchange Ratio”) and (b) each then-outstanding option to purchase Tourmaline common stock will be converted into an option to purchase Talaris common stock, subject to adjustment as set forth in the Merger Agreement. Under the Exchange Ratio formula in the Merger Agreement, upon the Closing, on a pro forma basis and based upon the number of shares of Talaris common stock expected to be issued in the Merger, pre-Merger Tourmaline stockholders will own approximately 59.4% of the combined company, the pre-Merger Talaris stockholders will own approximately 21.3% of the combined company on a fully diluted basis using treasury stock method and investors who are issued shares of Tourmaline common stock in the financing transaction described below will own approximately 19.3% of the combined company on a fully diluted basis using treasury stock method. The Exchange Ratio, and related pro forma ownership, will be adjusted to the extent that Talaris’ net cash at Closing is less than $62,437,500 or greater than $72,562,500. Upon completion of the Merger, the combined company will operate under the name Tourmaline Bio, Inc. and trade on the Nasdaq under the ticker symbol “TRML.” In addition, Talaris anticipates making a cash dividend of up to approximately $64.8 million to its stockholders prior to the closing of the Merger. Tourmaline stockholders immediately prior to the Merger (including Tourmaline stockholders issued shares in the private placement) are expected to own approximately 78.7% of the combined company and Talaris stockholders immediately prior to the Merger are expected to own approximately 21.3% of the combined company, each on a fully diluted basis. The percentage of the combined company that each company’s former stockholders are expected to own may be adjusted based on Talaris’ net cash at closing (subject to a collar) and the proceeds from the sale of certain of Talaris’ legacy assets prior to closing. In connection with the Merger, directors, officers and certain stockholders of each of Tourmaline and Talaris have executed support agreements, pursuant to the terms of which they have agreed to vote all of their shares of capital stock in favor of the Merger or the issuance of Talaris shares in the Merger, as applicable. Following the Merger, the combined company will be led by current members of the Tourmaline leadership team, including: Sandeep Kulkarni, MD, Chief Executive Officer; Yung Chyung, MD, Chief Medical Officer; Brad Middlekauff, JD, Chief Business Officer and General Counsel; Susan Dana Jones, Chief Technology Officer; Ryan Iarrobino, Senior Vice President, Product Development; Kevin Johnson, Chief Regulatory Officer, Dora Rau, Senior Vice President, Head of Quality. The merger agreement provides that the Board of Directors of the combined company will be composed of seven board members; five board members, including the CEO of Tourmaline, will be named by Tourmaline and two board members will be named by Talaris. Upon termination of the Merger Agreement under specified circumstances, Talaris may be required to pay Tourmaline a termination fee of $5.0 million and/or reimburse Tourmaline’s expenses up to a maximum of $500,000, and Tourmaline may be required to pay Talaris a termination fee of $7.1 million and/or reimburse Talaris’ expenses up to a maximum of $500,000.

The Merger has been unanimously approved by the Board of Directors of both companies and both Boards of Directors have recommended that their respective stockholders approve the matters regarding the Merger. The Merger is expected to close in the fourth quarter of 2023, subject to approvals by stockholders of each company, regulatory approvals, Nasdak listing, and other customary closing conditions. On June 22, 2023, Tourmaline entered into a securities purchase agreement with certain investors, pursuant to which Tourmaline agreed to sell shares of Tourmaline common stock for an aggregate purchase price of approximately $75,000,000 (the “Pre-Closing Financing”) immediately prior to the Closing.

Jefferies, Piper Sandler, Guggenheim Securities, and Truist Securities are serving as placement agents to Tourmaline in connection with the private placement and Cooley LLP is serving as legal counsel to Tourmaline in connection with the private placement and the Merger. SVB Securities is serving as exclusive financial advisor and fairness opinion provider to Talaris and Goodwin Procter LLP is serving as legal counsel to Talaris.